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Small Business Loans

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The information on legislative bases of CEF’s microlending program.

The loan disbursement in the Russian Legislation is regulated by Second Part of Civil Code, article no. 42. This chapter does not enter restriction on subject structure. That is anyone including the physical person, can give out loans.

According to article no. 4 of the Law of the Russian Federation « About licensing separate kinds of activity», to licensed kinds of activity concern kinds of activity which realization can cause drawing of damage to the rights, to legitimate interests, health of citizens, defense and state safety, to a cultural heritage of peoples of the Russian Federation and which regulation cannot be carried out by other methods, except for as licensing. Moreover, in article no.17 «List of kinds of activity on which realization licenses is required» of abovementioned Law, loan disbursement is not mentioned, and, hence, does not get under action of the given law and does not demand licensing.

Our activity does not concern to banking because according to article no. 5 the Law of the Russian Federation «About banks and bank activity» banking is activity on accommodation on its own behalf money involved in deposits. We do not involve money in deposits, and we use own sources of financing. Therefore, realization of the activity similar to ours does not need presence of the bank license that also has confirmed officials of Khabarovsk office of the Central Bank of the Russian Federation.

The opportunity to disburse loans is inherent in us as a making part of ours legal competence. This competence can be limited only under the court decision (article no. 49 Civil Code). The court did not limit us in activity on loan disbursement.

Besides other, neither the Civil Code, nor other statutory acts do not limit the sizes of interest rates under loans. The Article no. 809 speaks that « the creditor has the right to reception from the borrower of interests for the sum of the loan in sizes and the order, determined by the contract ».

Based on aforesaid we carry out our activity in full conformity with the current country legislation.

CEF ADVANTAGES

CEF Loan Disbursement Policy can be characterized as following:

1. Simplicity

The Client is required to present few documents. Accounts and other reports are not required. A CEF Credit specialist assists in completing all forms and all requirements are transparent.

2.Fast processing

After all required documents have been presented; a credit specialist needs only one day to visit a client’s business and residence, and to prepare all documentation for the credit committee. The Committee meets several times a day and approves loans regularly.

3. Individual approach

CEF tries to satisfy individual clients with credit amounts and credit periods, as well as flexible methods of payment. Pledge requirements are flexible. The Fund encourages clients to get take more loans by increasing their credit limit and repayment period and by offering discounts, all based on good credit history.

CEF main competitive advantages:

• Readiness to work with the small loan amounts (up to 1,500,000 roubles) which is not expressed by local banks;
• The minimal document package confirming business dealing;
• Simplicity of preparation: instead of the business - plan - the simplified Loan Application, instead of the full financial reporting - the Cash-flow Report;
• Term of registration of the Loan Application within 1-3 working days;
• Work with the borrowers without credit history. One of CEF mottos - «We build your credit history»;
• Loans without pledge, only under the guarantee of the third persons, whether it be guarantors with stable wages or businessmen;
• The maximal flexibility in loan security;
• The minimal financial registration and repayment expenses : the fund does not demand life insurance and a pledge of the borrower, the expensive pledge estimation is not required;
• Flexibility in loan repayment: granting of delays on main debt payment about two months, is not forbidden prescheduled repayment of the loan, the commission for prescheduled repayment is not raised;
• Readiness to work with entrepreneurs leading business less of three months. Since March, 2005 the Fund has developed a new Loan program for start-up businessmen. Till now any bank or MFI does not work with such clients;
• The informal staff approaches to work with the client. To each of them the approach as to the VIP - client, irrespective of the loan amount and duration of cooperation with CEF is shown. In Fund specially there is a test for a subject «ethics of relations with the client», not indifferent attitude is cultivated.

Loan types: